12:45 PM EDT, 04/30/2026 (MT Newswires) -- US economic growth fell short of Wall Street's expectations in the first quarter as spending slowed amid inflationary pressures that economists said will likely keep consumers under pressure.

Real gross domestic product in the world's largest economy rose at an annual rate of 2% in the March quarter, according to an advance estimate released Thursday by the Bureau of Economic Analysis. The consensus was for a 2.3% gain in a survey compiled by Bloomberg.

In the previous quarter, real GDP edged up 0.5%.

Consumer spending growth eased to 1.6% in the first quarter from 1.9% in the previous three-month period, but topped Wall Street's views for a 1.4% rise. Outlays on nondurable goods swung into negative territory while those on services decelerated, the data showed.

"The core of the economy remained solid in (the first quarter), driven by the (artificial intelligence) buildout and the tax cuts beginning to feed through," Oxford Economics Chief US Economist Michael Pearce said in remarks emailed to MT Newswires. "Those factors will continue to drive growth over the rest of the year, but the jump in energy prices will take some of the shine off what would otherwise have been a strong year for the economy."

Energy prices have soared following the US-Israel war with Iran that has left the Strait of Hormuz effectively closed. The conflict paused following a recent ceasefire between Washington and Tehran, but a framework for a permanent truce is yet to be reached.

"If inflation pressures continue to build in the months ahead, it will be more and more difficult for consumers to keep up," BMO Chief US Economist Scott Anderson said in a report.

Private investment growth accelerated to 8.7% from 2.3% on a sequential basis, BEA data showed. Exports and imports turned positive.

The personal consumption expenditures price index rose 4.5% in the March quarter, compared with a 2.9% gain in the previous three-month period. Excluding food and energy prices, the index accelerated to 4.3% from 2.7%.

The BEA said in a separate report Thursday that US inflation registered its fastest pace since mid-2022 in March.

"Higher energy prices were also behind the jump in inflation in March and will push headline inflation close to 4% in the months ahead," according to Pearce. "The more worrying trend for the Federal Reserve is signs of stronger electronics inflation due to rampant AI demand and passthrough from energy prices to core prices, which will keep core PCE inflation sticky at close to 3% this year."

The Fed kept its benchmark lending rate steady on Wednesday, saying the Middle East conflict is fueling uncertainty around the US economic outlook.